Correlation Between Motilal Oswal and PTC India

Can any of the company-specific risk be diversified away by investing in both Motilal Oswal and PTC India at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Motilal Oswal and PTC India into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Motilal Oswal Financial and PTC India Financial, you can compare the effects of market volatilities on Motilal Oswal and PTC India and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Motilal Oswal with a short position of PTC India. Check out your portfolio center. Please also check ongoing floating volatility patterns of Motilal Oswal and PTC India.

Diversification Opportunities for Motilal Oswal and PTC India

-0.62

Correlation Coefficient

Motilal Oswal  PTC India

Excellent diversification

The 3 months correlation between Motilal and PTC is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Motilal Oswal Financial and PTC India Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTC India Financial and Motilal Oswal is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Motilal Oswal Financial are associated (or correlated) with PTC India. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTC India Financial has no effect on the direction of Motilal Oswal i.e., Motilal Oswal and PTC India go up and down completely randomly.

Pair Corralation between Motilal Oswal and PTC India

Assuming the 90 days trading horizon Motilal Oswal Financial is expected to generate 0.93 times more return on investment than PTC India. However, Motilal Oswal Financial is 1.07 times less risky than PTC India. It trades about 0.07 of its potential returns per unit of risk. PTC India Financial is currently generating about -0.02 per unit of risk. If you would invest  95,565  in Motilal Oswal Financial on October 5, 2024 and sell it today you would earn a total of  2,955  from holding Motilal Oswal Financial or generate 3.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Motilal Oswal Financial  vs.  PTC India Financial

Motilal Oswal Financial

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Motilal Oswal Financial are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Motilal Oswal disclosed solid returns over the last few months and may actually be approaching a breakup point.

PTC India Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PTC India Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, PTC India is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Motilal Oswal and PTC India

The main advantage of trading using opposite Motilal Oswal and PTC India positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Motilal Oswal position performs unexpectedly, PTC India can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in PTC India will offset losses from the drop in PTC India's long position.

The idea behind Motilal Oswal Financial and PTC India Financial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.